2018-9-12 17:12 |
We’ve spent a lot of time talking about how a bitcoin ETF could send crypto prices skyrocketing. Bakkt and a Citigroup crypto custody service, however, could also play a significant role in future crypto price movements.
Depending on the outcome of a bitcoin ETF, Bakkt’s launch, and a Citigroup custody service, we could witness significant market movements in the crypto industry over the coming months.
The crypto industry could use some good news. After peaking in December 2017 / January 2018, the crypto market has lost about 80% of its value, with some cryptocurrencies falling 95% off their previous highs. Bitcoin, which peaked at $20,000 in December 2017, now sits at around $6,200 as we go to press.
A bitcoin ETF approval could change that trend in a heartbeat. So could Bakkt or Citigroup’s crypto services.
Let’s talk about how each of these events could play a prominent role as crypto markets continue to grow:
Bitcoin ETF Approval by September 30 Could Send Crypto Markets SkyrocketingTo date, the SEC has rejected all 16 bitcoin ETF proposals that have reached its desk. The SEC rejected a bitcoin ETF proposal from the Winklevoss twins and Gemini earlier this summer, then denied ETF proposals from three separate companies in August (although those latest denials were later stayed).
Here’s the thing: nobody expected any of those ETFs to be approved.
That’s why the next ETF approval or denial could be a big one. The SEC needs to make a decision about another bitcoin ETF before the end of September. The SEC needs to make a decision about the highly-anticipated Cboe VanEck / SolidX Bitcoin Trust ETF.
That ETF, proposed by VanEck and SolidX to be listed on Cboe, would track the price of bitcoin by holding real bitcoin. That’s an important difference: other denied ETFs have held bitcoin futures contracts and similar derivatives. The VanEck / SolidX Bitcoin Trust ETF also has a $200,000 per share price tag, which would ensure only institutional investors and accredited investors would be able to access the product.
For all of these reasons, analysts believe the VanEck / SolidX bitcoin ETF has the best chance of being approved – even if approval still seems unlikely.
The SEC has to make a decision on the ETF before September 30. They can deny the ETF, approve it, or delay the decision to a later date.
If that ETF is approved, markets will likely rally to heights beyond the all-time high of bitcoin. If the ETF is denied, then we expect the price of bitcoin to slump even further. Some even believe the price of bitcoin will crash if the ETF is denied or delayed again.
Bakkt is Waiting CFTC Approval for a Regulated Crypto On-RampYou’ve probably heard about the bitcoin ETF mentioned above. One of the bigger stories in the crypto community, however, is Bakkt.
Bakkt was launched by ICE, the parent company of the New York Stock Exchange, in partnership with major organizations like Starbucks and Microsoft.
The goal of Bakkt is simple: the company wants to be the best on-ramp for institutions seeking to enter the crypto space – similar to how Coinbase is the best on-ramp for retail investors.
With that goal in mind, Bakkt has sought approval from the US Commodities and Futures Trading Commission (CFTC). If the CFTC approves the application from Bakkt, then Bakkt would become a fully licensed and regulatory-compliant exchange. This would open the doors for institutions to jump into the crypto space in a safe and regulated way.
Backed by Microsoft, Starbucks, and other major institutional partners, Bakkt stands a real chance of being the preferred institutional on-ramp for the crypto industry.
Citigroup is Reportedly Developing a Regulated Crypto Custody Service that Would “Negate the Need for A Bitcoin ETF”There’s another major piece of news that could hit the crypto community in the coming weeks. Citigroup is reportedly preparing a “digital assets receipt” that would allow institutions to buy physical bitcoin in a secure, regulatory-compliant way. Institutions could purchase bitcoin while leaving the funds secured with a third party. Institutions wouldn’t need to handle bitcoin themselves.
Here’s how NewsBTC.com explains Citigroup’s institutional service:
“The product would be structured like that of an American depository note, which allows US based investors to purchase foreign stocks that aren’t traded on any exchanges in the US.”
Business Insider added to the report with the following:
“In this case, the cryptocurrency would be held by a custodian, with the so-called DAR issued by Citigroup, the people said. The bank would alert the Depository Trust & Clearing Corp., a Wall Street middleman that provides clearing and settlement services, that it issued a receipt, one of the people said. That lends an important layer of legitimacy and gives investors a way to track the investment within a system that they’re already familiar with, the person added.”
“The product would largely negate the need for a bitcoin ETF”, writes NewsBTC.com, because it would “act as a suitable alternative without any sort of additional risks or difficulties.”
It’s unclear how far along Citigroup’s custody service is – or if it will ever launch. At this phase, the company hasn’t officially announced the crypto custody product, and we’re depending on rumors from a Business Insider source. However, it’s big news anytime a major traditional financial institution is rumored to be getting involved with crypto.
These Three Stories Will Define Crypto Prices Over the Coming MonthsOverall, there’s a common thread between all three of these stories: they will all likely play a significant role in the price of bitcoin over the coming months.
If the three news stories go a positive direction, then we’ll likely see an upward explosion in the price of bitcoin. Markets would surge with the approval of a bitcoin ETF, with the launch of Citigroup crypto custody services, and the launch of Bakkt’s approved crypto on-ramp.
On the other hand, markets could slump to a multi-year low if the three news stories go in a negative direction.
The only thing left to do is wait and see where the crypto markets go next.
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